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Propensity is defined as a natural tendency. An example of propensity is an inborn love for writing. pl. -Â·ties. 1  a natural inclination or tendency; bent.  Obs. favorable inclination; bias (for)
The need for financial planning declines as your income increases. Current consumption effects future consumption. A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to consume of 90%. A person making $35,000 and spending $30,800 has an average propensity to consume of 80%. Most families find it difficult to discuss money matters. Average propensity to consume refers to how much of your money you plan to save in your financial plan. Your corporate stock is an example of a real asset.